Holyman Locked Into Cross-channel Ferries

Sydney Morning Herald

Tuesday May 25, 1999

By LACHLAN JOHNSTON

Marine and storage group Holyman has warned there will be no quick exit from its malaise, with its loss-making English channel ferry businesses locked into long-term contracts for several years.

The fast ferries business, which accounted for most of the company's $54 million abnormal loss last year, faces pressure from the abolition of duty-free arrangements in Europe on July 1.

Duty-free shopping in Europe entices thousands of English passengers to cross the channel each day.

The company did offer a ray of hope at yesterday's annual general meeting, however, announcing all of its businesses were ahead of budget over the first four months of the calendar year and the ferries business might break even in the year.

The company last year recorded a $44.8 million loss, following the large abnormal expenses. It sold several businesses and reduced its debt from $204 million to $150 million.

Chairman Mr Richard Austen said the company had received advice from its joint venture partner in channel ferries, Hoverspeed, that the business would suffer less from a drop-off in duty-free passengers than other ferry services, because Hoverspeed Holyman operates on a "tourist" route, rather than a "shoppers" route.

"In the event that the loss of duty-free income makes the business non-viable, the operation can be closed down without penalty," said Mr Austen.

After several criticisms from shareholders, Mr Austen said Holyman was also trying to refinance the crippling loans it has over two Channel ferries, but had so far been rebuffed by the Commonwealth Bank.

He said the decision on European duties should facilitate new negotiations with the bank. "We're trying to say that the ferry business is certainly not for us," Mr Austen told the meeting.

"[But] we have partnerships, we have labour relations to worry about . . ."

The two ferries, if sold, could strip Holyman's debt down to about $66 million, a gearing ratio of 60 per cent.

During a sometimes fiery meeting, Mr Austen said the board regretted some of the decisions it had taken to buy the Channel ferry business, then named Holyman Sally, in 1996.

Holyman shares rose 1c to 38c yesterday.

© 1999 Sydney Morning Herald

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